SPOUSES, COHABITING SPOUSES, AND COMMON-LAW PARTNERS

The calculation of many tax credits and benefits depends on whether an individual has a cohabiting spouse or common-law partner. Some credits and benefits use net family income, which combines the net incomes of cohabiting spouses or common-law partners. Understanding these terms is therefore important.

What is a spouse?

The Income Tax Act does not define “spouse.” Court decisions have interpreted a spouse as a person to whom the taxpayer is legally married. Even if a married couple is separated, they are still considered spouses of each other for tax purposes (but not cohabiting spouses). 

What is a common law partner?

A common-law partner is defined under the Income Tax Act as a person who cohabits with a taxpayer in a conjugal relationship and meets at least one of the following criteria:^[1]

1. The conjugal relationship has been continuous for at least 12 months (in which case they become common law partners at the 12 month mark). In this definition, 12 continuous months includes any period the couple were separated for less than 90 days because of a breakdown in the relationship.
2. They are the parent of the taxpayer’s child.
3. They have custody or control of the taxpayer’s child (or had custody immediately before the child turned 19), and the child is wholly dependent on them for support.

Important:

• For criterion #1 above, common-law status begins only after 12 consecutive months of cohabitation. It is not retroactive. Care should be taken when asking clients when their marital status became common law.  Clients might give the date they first started living together, but the actual date is 12 months later.
• For criteria #2 and #3 above, common law status begins immediately once the couple begin cohabiting in a conjugal relationship.

What are cohabiting spouses or common law partners?

Under the Income Tax Act, spouses or common law partners are defined as cohabiting if they are not living separate and apart.^[2] 

• If a  couple separates for less than 90 days no matter what the reason, they are still deemed cohabiting spouses during that period.
• If a separation due to a relationship breakdown lasts 90 days or more, they are no longer considered cohabiting spouses effective from the date the separation began.^[3]

Living separate and apart:

For most purposes of the Income Tax Act, “living separate and apart” refers specifically to living apart because of a breakdown in the relationship. Couples living apart for other reasons—such as one partner working or studying abroad temporarily, immigration restrictions, or incarceration—are not considered living separate and apart.

What is a conjugal relationship?

The Income Tax Act does not define “conjugal relationship”, but courts have provided guidance. According to these decisions, the CRA considers a conjugal relationship to be a marriage-like relationship where two individuals demonstrate factors such as:

• Living together in the same home.
• Having a sexual or intimate relationship and displaying emotional commitment and support for each other.
• Being financially interdependent, for example having joint bank accounts or sharing household expenses.
• Representing themselves to family and friends as a couple, and socializing as a couple.

These are not all the factors, and a couple doesn’t need to demonstrate all factors to qualify as conjugal. Some factors are more important than others, and context matters.

Two people living together, claiming not to be spouses:

If two adults live in the same household but claim not to be spouses, or to be separated, the CRA may challenge their status. Federal child benefits are reduced once family income rises above $38,237. For example, with one child, the reduction is 7% of the amount over the threshold.^[4]  The calculation of social assistance in Ontario is also affected by spousal status. The CRA is aware of the incentive couples may have to be dishonest about their relationship.

The CRA may send a letter requesting documents to support single or separated status, including: mortgage papers, property tax bill with property description, real estate listing, utility bills, driver’s license, auto insurance policy, medical insurance policy, bank statements, medical records, birth certificates, school records, separation agreement, and custody agreement.

In addition to providing, to the extent possible, the documents the CRA requests, a person may wish to provide additional documents supporting the position that the relationship is not spousal. This could include statements or affidavits of persons with knowledge of the relationship, such as friends, relatives, and teachers. The evidence should show that the two people don’t have a romantic relationship, they don’t share a bedroom, they are financially and socially independent, and they don’t represent themselves to others as a couple.

To be clear, it is possible for two people to separate, no longer be spouses, and yet live under the same roof. However they may face an uphill battle persuading the CRA, and many disputes have made it to court.^[5]

References:

• CRA webpage - Marriage Status
• Income Tax Act, s.248 - definition of common-law partner
• Income Tax Act, s.122.6 - definition of cohabiting spouse or common-law partner